UK surge in post-Christmas returns reveals dark side of online shopping boom

Returns process thought to cost firms about £7bn a year and weigh heavily on companies’ carbon footprints

It all started with a hooded tracksuit worth less than £30. The unwanted item, processed online at one second past midnight on Christmas Day because it was too large, was the first in a torrent of festive returns for ZigZag Global, a company that specialises in handling online returns.

Within an hour, 709 products had been returned online via ZigZag; at 3.51am a £99 off-the-shoulder dress was the first item to be deposited at an InPost locker, and when newsagents began opening at 10am, queues began forming at counters to post back unwanted items.

Shoppers have sent back more goods than ever this Christmas as the cancellation of parties, the return to working from home and a shift to online shopping led to an enormous pile of unwanted goods.

Since Christmas, returns have surged by 24% on the year before, according to ZigZag, which works with the likes of Boohoo, Selfridges and Gap. Fellow returns specialist ReBound has recorded even higher demand, with returns in December 40% greater than a year earlier.

With up to half of clothing bought online returned to some retailers, the whole process is estimated to cost businesses about £7bn a year, according to a 2020 study by consultancy KPMG. It is tricky to measure the environmental costs, but the transport, storage and disposal of items that cannot be resold because they are damaged or dirty is likely to weigh heavily on brands’ carbon footprints, and poses troubling questions about the dark side of the online sales boom.

Anita Balchandani at consultancy McKinsey says managing the flow of returned goods is a “sustainability imperative for the industry”, not just looking at the impact of the “last mile” delivery to, and from, homes – but also what happens to an item that is no longer wanted.

While the percentage of items sent back by online shoppers dipped in the early days of the pandemic, it has since risen as trends have changed: easy-fitting tracksuits, popular during the start of working-from-home, have been ditched in favour of more structured items such as suits and dresses, thanks to the return of weddings and office working. Last month, online fast fashion specialist Boohoo was forced to slash sales and profit expectations, partly as a result of the change in habits.

About 15% of electrical goods sent back after being bought online are disposed of, according to one major reprocessor, because either they are unfixable or not worth fixing or cleaning. Every brand or retailer has a different benchmark, but as it costs up to £20 to reprocess each individual item many returns lose retailers money. Many small products, unless still untouched in their original packaging, will never be reused.

A considerable effort is involved in processing returns. Checking goods are in safe working condition, clean and that any software has been wiped of personal images or data, must be done manually and is a time consuming, sometimes tricky process. While some brands supply reprocessors with free parts to mend faulty items and avoid them being landfilled, others do not.

A large expensive item, such a washing machine or even a food processor, is likely to be checked, fixed and resold – probably via an auction site such as eBay – for 15% or 20% less than its retail price.

But the best that can be expected for most broken or used hair clippers or electric toothbrushes is that they are dismantled for recycling.

Cosmetics are another tricky area. Unless they are completely untouched and in their original package, resale is not possible because of the hygiene risk.

About 80% of returned clothing is likely to be resold without significant work – perhaps requiring new packaging or a steam. Of the rest, most can be reprocessed but about 5% is likely to be deemed unfit for resale, either because it is too damaged or potentially unhygienic – such as worn underwear or swimwear.

Items that have clearly been on a night out, had tags removed or are marked with cosmetics may not easily be revamped for sale by the original retailer and, again, the value of that item will influence the decision over whether it is to be to put through a cleaning or mending process or ditched.

Al Gerrie, the chief executive of ZigZag Global, says: “Fast fashion has about a six-week life cycle. If it spends three or four weeks off the shelf it is losing value in that time and, if it can’t make it back [in time], it will be less attractive or unsaleable. If it’s a Christmas-themed item, it may have to wait until next year.”

Many unwanted items may be sold in bulk to charities or to resellers who then mend or repurpose them for sale on eBay or Depop.

For the rest, the vast majority of major retailers now send those unwanted items to charities or for recycling, but a proportion is still thought to be either burned or sent to landfill despite a furore over such practice in recent years.

However, pressure to behave more sustainably and to cut down costs is driving retailers to reduce the amount of unwanted goods.

Laura Gee at another returns specialist ReBound, says: “Brands are on a learning curve. They are getting better at [reprocessing] as shoppers are becoming more sustainably minded.”

Technology firms such as ZigZag and ReBound help retailers track returned items more closely, monitoring why a sale has not been successful and taking decisions on where and how to reprocess goods without necessarily bringing them all back to the UK, if sold overseas.

Last year, eBay said it had seen a surge in retailers setting up their own online stores to clear unwanted products and seconds.

Other techniques to reduce returns rates include posting customer reviews which flag how a garment fits, using avatars to enable virtual trying on of a dress or encouraging customers to bring an item back to a store where they can pick up, and try on, the alternative.

Geerie at ZigZag says: “Even fast-fashion retailers are becoming more conscious about corporate social responsibility and being more sustainable and trying to recover product whenever possible. It is a shift in the market for the good but not at a low cost, they are definitely losing money on some products.”

Change is partly being driven by the threat of legislation. In France, companies must monitor what happens to unsold goods and from this month are banned from destroying them. Other European countries are expected to follow suit.

In the UK, charities called for an anti-waste law, to be introduced after Amazon was forced to deny it sent household goods such as laptops and TVs to landfill after employees were filmed by ITV last year placing such products into boxes labelled “destroy”. The company said the items were donated or recycled.

Balchandani says better consumer education about the effects of buying more selectively will be key to reducing the wasteful merry-go-round of returned goods.

“In a world where consumers are increasingly conscious of their carbon footprint I don’t think brands are doing enough talking about how do you consume more thoughtfully,” she says.

Source: Read Full Article